Rising costs and currency woes: The challenges facing intending pilgrims


The price of luxury Islamic pilgrimage (Hajj) programmes soared by 45 percent to up to EGP 450,000, while the land pilgrimage prices surged by 73 percent to up to EGP 255,000, according to data released by the Ministry of Tourism and Antiquities.

“The main reason behind that staggering increase in Hajj prices is the devaluation of the pound and the enduring instability in the currency, as the Saudi riyal reached more than EGP 16.5 in the parallel exchange rate market,” a source at a public sector tourism company requested anonymity told Ahram Online.

He explained that being a public sector company, he has to secure foreign currency through banks, which are currently facing a shortage in their supply. In contrast, private tourism companies, he noted, are tapping into the black market for their foreign exchange needs.

“Consequentially, the prices of air travel tickets jumped to EGP 10,000. Economy hotel room prices reached SAR 400, compared to SAR 60 in 2021, while luxury hotels priced their rooms at an average of SAR 1,400, up from SAR 450 before,” the source confirmed.

He mentioned that inflation has adversely affected demand, leading many Hajj seekers to shift towards Umrah while others have opted to postpone both Hajj and Umrah entirely.

Umrah, the lesser Islamic pilgrimage to Mecca, usually costs less than Hajj. Unlike Hajj, which has specific dates determined by the Islamic lunar calendar, Umrah can be undertaken at any time of the year.

Last year, 45,000 Egyptian pilgrims made the Hajj, which concluded on 1 July, while 347,110 made Umrah.

In general, the source highlighted the challenges facing the Egyptian tourism sector, with many local companies closing down. “They have been replaced by foreign investors who hire Egyptians on seasonal and temporary contracts.”

Agreeing with our source, Adel Shabaan, member of the Egyptian Travel Agents Associations, told Ahram Online that “Saudi Arabia has increased all Hajj season [costs] by around SAR 2,000 this season, which comes in the global inflationary context, which led – accompanied with other factors – to a 40 percent drop in the demand on Hajj and Umrah”

“At the end of the day, Hajj is a service that is elastic to inflation,” he added.

Shabaan noted that the primary factor contributing to the substantial increases in Hajj prices this season is the instability of pound exchange rates, underscoring the need for a macroeconomic solution.

Additionally, he said that the crisis has had a severe impact on tourism companies, leading to a 50 percent reduction in the number of companies organizing pilgrimage programmes this year.

Egypt has been facing harsh economic conditions since February 2022 due to the global and domestic ramifications of the war in Ukraine and the global supply chain crisis.

The crisis caused investors to withdraw over $20 billion in hot money from the Egyptian market; it has forced the Central Bank of Egypt (CBE) to devalue the pound by 50 percent (according to official rates).

Despite being stable at around EGP 31 against the US dollar in the official market since March 2023, the value of the pound has been declining in the parallel and forward markets. The US dollar rate in the currency parallel market is currently traded for over EGP 60/1 USD.

On Tuesday, the USD reached more than EGP 60 in the currency parallel market and EGP 54.26 in the forward 12-month contracts.

Source: ahramonline